Italy is considering raising taxes on energy companies to finance tax cuts and increased public spending under its 2027-2029 budget, according to sources cited by Reuters on October 23. Prime Minister Giorgia Meloni’s government is expected to present the budget next week amid rising energy and borrowing costs and growing pressure from cost-of-living protests ahead of national elections next year. The proposed measures could involve increasing the IRAP corporate tax rate on companies producing, distributing and supplying energy products.
Italy raised the IRAP tax rate on energy firms from 3.9% to 5.9% in February for 2026 and 2027, aiming to generate approximately €1 billion in additional revenue over the two years. The government is now considering a further rate increase or extending the existing 5.9% rate through 2029. The proposal comes despite energy companies, including state-controlled Eni, announcing fuel price caps last month in an apparent effort to discourage the introduction of a windfall tax. Eni reported more than double its third-quarter net profit year-on-year on Friday and announced a €1.3 billion special dividend alongside an expanded share buyback programme.
Meloni’s government faces mounting public discontent over high fuel prices and living costs, with truck drivers in southern Italy blocking roads and taxi drivers planning a rally outside the economy ministry to demand support. Protests and riots have also erupted in several northern cities. Although the government’s Draft Budgetary Plan published last week did not specifically mention new taxes on energy firms, it projected unspecified tax increases of €10 billion to €11 billion over the next three years, equivalent to 0.44% of national output. The plan also anticipates a similar amount of additional revenue from the financial sector by 2029.
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